An AIF in a Collective Investment Undertaking:

1. Which raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors;
2. Which does not require authorisation as UCITS.

• The undertaking does not have a general commercial or industrial purpose;
• The undertaking pools together capital raised from its investors for the purpose of investment with a view to generating a pooled return for those investors;
• The unitholders/shareholders of the undertaking have no day-to-day discretion or control.

It is the commercial activity of taking direct or indirect steps by an undertaking or a person or entity acting on its behalf (typically, the AIFM) to procure the transfer or commitment of capital by one or more investors to the undertaking, for the purpose of investing it in accordance with a defined investment policy

When capital is invested in an undertaking by a member of pre-existing group, for the investment of whose private wealth the undertaking has been exclusively established, this is not likely to be within the scope of raising capital

• The fact that a member of a pre-existing group invests alongside investors not being a member of a pre-existing group should not have the consequence that the criterion ‘raising capital’ is not fulfilled. Whenever such a situation does arise, all the investors should enjoy full rights under the AIFMD.
• ‘Family members’ means the spouse of an individual, the person who is living with an individual in a committed intimate relationship, in a joint household and on a stable and continuous basis, the relatives in direct line, the siblings, uncles, aunts, first cousins and the dependants of an individual

Professional: Investors who fall within the meaning of Annex II of the MiFID II

1. Entities which are required to be authorized or regulated to operate in the financial markets:
   1. Credit institutions;
   2. Investment firms;
   3. Other authorised or regulated financial institutions;
   4. Insurance companies;
   5. Collective investment schemes and management companies of such schemes;
   6. Pension funds and management companies of such funds;
   7. Commodity and commodity derivatives dealers;
   8. Locals;
   9. Other institutional investors.
2. Large undertakings meeting two of the following size requirements on a company basis:
   1. Balance sheet total – € 20,000,000
   2. Net turnover – € 40,000,000
   3. Own funds – € 2,000,000
3. National and regional governments
4. Other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitization of assets or other financing transactions
5. Or on request, upon certain requirements.

Well-informed: Any investor who is not professional and,

1. Confirms that:
   1. He either has sufficient knowledge and experience in financial and business matters in order to be able to assess the benefits and associated risks; or
   2. His business is related to the managements, acquisition or sale of assets, either for its own account or on behalf of third parties, of the same type as the investments of the AIF;
2. and
   1. Either invests at least €125,000; or
   2. Has been assessed as a sufficiently well0informed investor by a credit institution, an AIFM, a UCITS Management Company, an Investment Firm, or any other EU sub-threshold AIFM; or
   3. Is senior officer in any of the entities mentioned above.
3. Irrespective of paragraphs (1) and (2), the investor is a person who effectively directs the activities of the Company or its external manager, or is a person who manages the investments of that particular AIF.

Retail: Neither Professional nor Well-informed

In Open-ended AIFs, Investors can redeem/repurchase their units before the dissolution and liquidation; the frequency and redemption procedure is pre-defined in the Rules / Instruments of incorporation, or the Offering Documents

Close-ended AIFS are other than  those described as open-ended

When a fund is established it needs to define investment compartments. When a single compartment exists is called a Single Scheme and when there are more than one is called Umbrella Scheme. There is no limit to the number of compartments however the following conditions/requirements must be taken into consideration.

Each compartment...:

• ...is considered as a separate AIF
• ...may have a different investment strategy
• ....issues corresponding units
• ...has segregated assets
• ...has obligatory segregated liabilities towards investors if addressed to retail investors
• ...may invest in another compartment of the AIF, under certain conditions

Portfolio Management and Risk Management are the core functions of a fund, additional management functions are:

• Fund Administration
• Marketing
• Activates related to the assets of AIFs, namely services necessary to meet the fiduciary duties of the external manager, facilities management, real estate administration activities, etc

When capital is invested in an undertaking by a member of a pre-existing group, for the investment of whose private wealth the undertaking has been exclusively established, this is not likely to be within the scope of raising capital

The fact that a member of a pre-existing group invests alongside investors not being a member of a pre-existing group should not have the consequence that the criterion ‘raising capital’ is not fulfilled. Whenever such a situation does arise, all the investors should enjoy full rights under the AIFMD.